The Hindu Business Line : The most sought-after corporate borrowers!

Chennai, Aug. 7 Who are the top corporate borrowers in India? The blue chip companies whom all banks court and whose accounts are a must-have in every bank’s lending portfolio? Well, here’s the top list: HDFC, Reliance Industries, Indian Oil Corporation, Power Finance Corporation, Hindalco, HPCL, etc.

They are the ones who can make banks lend at fine rates. But more importantly, they are valuable enough for banks to do so even at the cost of exceeding prudential norms laid down by regulators about total lending to individual company borrowers as well as borrowers from a corporate group.

Loan Exposure

The Reserve Bank of India prescribes loan exposure limits for banks. It asks banks to limit their loan exposure to single borrowers at 15 per cent of their capital funds and they can go up to 40 per cent of their capital funds for group borrowers.

Banks are allowed an additional leeway of 5 per cent for infrastructure lending purposes. When companies breach these regulatory norms (with due permission from their Board of Directors), they are required to keep the regulator informed and also provide this information in their annual report.

The list of borrowers themselves may not come as a surprise to those in the corporate world. What they may find interesting, however, is the number of banks which bent backwards to provide funds in excess of their 15 per cent cap.

For HDFC, there were 10 banks that exceeded this cap in 2006-07, including Bank of India, Union Bank, Corporation Bank, Central Bank, Citibank, Vijaya Bank, State Bank of Mysore, State Bank of Indore, State Bank of Hyderabad and State Bank of Travancore. Some banks seemed constrained only because there was ceiling of 20 per cent and managed to keep their exposure literally at the brink — at 19.70 per cent to 19.97 per cent.

For Reliance Industries, there were six banks including SBI, Canara Bank, Union Bank, Corporation Bank, HSBC and Citibank who gave in excess of the 15 per cent cap. SBI sanctioned a peak amount of Rs 5,457 crore last fiscal compared with the ceiling of Rs 4,794 crore. IDBI’s exposure to the Reliance group exceeded the 40 per cent limit last fiscal.

Similarly, for Indian Oil Corporation too, there were six lenders who gave a lot.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Postal financial services are developing at a rapid rate

Rupee closes flat on dollar buying

Birla Sun Life expands capital base

Disputes over mediclaims settlement on the rise

Moody’s rating too conservative

‘Liquidity glut in debt markets can hit common investor’

SBI’s HR plan to gain market share

Ben Bernanke’s moment of truth?

ICICI Bank cuts rates on short-term deposits

The most sought-after corporate borrowers!

Vijaya Bank sets target for Kerala

Certificates of deposit rates crash to 8%

Call rates close tad higher